Johnson & Johnson Agrees To Pay More Than $2.2 Billion To Resolve Investigations

The U. S. Department of Justice announced on November 4, 2013 that Johnson & Johnson (“J & J”) has agreed to pay in excess of $2.2 billion to resolve civil and criminal investigations relating to J & J’s prescription drugs Risperdal, Invega, and Natrecor. The allegations include the promotion of the drugs for uses not approved as safe and effective by the Food and Drug Administration (“FDA”) and payment of kickbacks to physicians and to the nation’s largest long-term care pharmacy provider.

J & J agreed to pay criminal fines and forfeiture totaling $485 million and to pay civil settlements with the federal government and states totaling $1.72 billion for violations of the law and civil settlements based on the False Claims Act arising out of multiple investigations of J & J and its subsidiaries. In addition to the monetary payments and forfeitures, J & J agreed to a five-year Corporate Integrity Agreement (“CIA”) with the Department of Health and Human Services Office of Inspector General (“HHS-OIG”) that is designed to increase accountability and transparency and prevent future fraud and abuse. The CIA requires J&J to change its executive compensation program to permit the company to recoup annual bonuses and other long-term incentives from covered executives if they, or their subordinates, engage in significant misconduct, among other things.

The Risperdal Allegations

J & J subsidiary, Janssen Pharmaceuticals Inc. (“Janssen”), was alleged to have introduced Risperdal, an antipsychotic drug that was approved only to treat schizophrenia, into interstate commerce for an unapproved use (to treat symptoms such as anxiety, agitation, depression, hostility and confusion in elderly dementia patients), thereby rendering the product misbranded. Janssen also allegedly promoted Risperdal for use in children and individuals with mental disabilities. The government alleged that Janssen provided incentives for off-label promotion and intended use by basing sales representatives’ bonuses on total sales of Risperdal in their sales areas and not just sales for FDA-approved uses. There were other allegations that Janssen engaged in wrongful conduct with regard to Risperdal.

The government alleged that J&J and Janssen caused false claims to be submitted to federal health care programs by promoting Risperdal for off-label uses that federal health care programs did not cover, making false and misleading statements about the safety and efficacy of Risperdal and paying kickbacks to physicians to prescribe Risperdal.

The Invega Allegations

Invega is a newer antipsychotic drug sold by Janssen. Although Invega was approved only for the treatment of schizophrenia and schizoaffective disorder, the government alleged that J&J and Janssen marketed the drug for off-label indications and made false and misleading statements about its safety and efficacy.

The Natrecor Allegations

Natrecor, a heart failure drug, is used to treat patients with acutely decompensated congestive heart failure who have shortness of breath at rest or with minimal activity. Natrecor was approved by the FDA based on a study involving hospitalized patients experiencing severe heart failure who received infusions of Natrecor over an average 36-hour period. Scios, Inc., a subsidiary of J & J, allegedly aggressively marketed Natrecor for scheduled, serial outpatient infusions for patients with less severe heart failure (these infusions generally involved visits to an outpatient clinic or doctor’s office for four- to six-hour infusions one or two times per week for several weeks or months) – a use not included in the FDA-approved label and not covered by federal health care programs. The government alleged that J&J and Scios caused false and fraudulent claims to be submitted to federal health care programs for Natrecor.

The Kickbacks Allegations

J&J and Janssen allegedly paid kickbacks to Omnicare Inc., the nation’s largest pharmacy specializing in dispensing drugs to nursing home patients, under the guise of market share rebate payments, data-purchase agreements, “grants,” and “educational funding.” The kickbacks were intended to induce Omnicare and its hundreds of consultant pharmacists to engage in “active intervention programs” to promote the use of Risperdal and other J&J drugs in nursing homes.

The resolution of the claims will result in $167.7 million in whistleblower payments divided among whistleblowers in three states ($112 million for whistleblowers in Pennsylvania, almost $28 million for whistleblowers in Massachusetts, and $28 million to one whistleblower in California who had worked for Scios during a nine-month period from 2003 to 2004 and filed his whistleblower lawsuit in 2005).